Loans used by companies, local governments, or other organizations to raise funds for domestic and overseas green projects are called Green Loans.
- Proceeds are allocated exclusively to Green Projects
- Proceeds are tracked and managed in a reliable manner
- Transparency is ensured by reporting after the financing
The borrowers of Green Loans
- Corporations that raise funds for Green Projects (including Special Purpose Companies ("SPCs") that only handle Green Projects)
- Financial institutions that raise investment funds and loans for Green Projects
- Local governments that raise funds for Green Projects
The lenders of Green Loans
- Financial institutions that commit to ESG loans, etc.
Benefits of Green Loans
- 1Enhancing sustainability management
- Working on Green Loans can lead to the development of governance, strategy, and risk management structures related to sustainability within an organization, such as a company. This also helps to satisfy the ESG information disclosure requirement placed by the Task Force on Climate-related Financial Disclosures (TCFD) and others. Furthermore, it will improve the medium- and long-term ESG assessment of the borrower, that will in turn help raise its corporate value.
- 2Acquisition of public acceptance by demonstrating willingness to promote Green Projects
- Borrowers can demonstrate that they are actively promoting Green Projects by procuring Green Loans, which could possibly earn them public acceptance.
- 3Reinforcement of the funding base by building relationships with new lenders
- Procuring a Green Loan and disclosing the relevant information offers borrowers the opportunity to consolidate their funding base by building new relationships with financial institutions that value ESG loans.
- 4Expectations for raising funds on relatively favorable terms
- If a company takes out Green Loans or similar loans that use cashflow generated from a renewable energy or other business with strong business viability that it operates, it may be able to raise funds on relatively favorable terms from financial institutions who are well versed in evaluating the feasibility of such businesses.
- 1Serving as ESG loans
- Green Loans can provide a stable cash flow, unless borrowers default on the loan. Lenders can show that they actively invest in Green Loans, support Green Projects, and thereby gain favorable public opinion.
- 2Achieving both investment returns and environmental and other benefits through lending
- By providing Green Loans, lenders can support the realization of the environmental benefits that contribute to creating a sustainable society, while simultaneously gaining returns on their lending.
- 3Improvement of sustainability through deep interactions with borrowers
- By providing Green Loans, lenders can ensure engagement based on factors such as the sustainability of environmental benefits and negative impact on the environment, through the analysis and evaluation of non-financial information related to environmental benefits and other factors that the borrower discloses. Such efforts may improve the sustainability of the borrower and further lead to retention and improvement of its corporate value.
- 1Contribution to global environmental conservation
- An increase in Green Loans is expected to increase private funds in Green Projects, contributing to the substantial reduction of GHG emissions and the prevention of degradation of natural capital.
- 2Raising the awareness of individuals who deposit with financial institutions that provide Green Loans
- An increase in Green Loans and Green Deposits will enhance individual awareness of Green Loans. Raising such awareness will motivate financial institutions, etc., that are the holders of individuals' assets, to actively lend Green Loans.
- 3Contribution to resolving social and economic issues through the promotion of Green Projects
- The promotion of Green Projects can lower energy costs, strengthen energy security, revitalize the regional economy, and enhance resilience in the event of disasters.